The Section 8 voucher program enables low-income residents to rent homes in the private market while receiving financial assistance to keep their housing affordable. Unfortunately, voucher holders are more likely to live in high poverty areas, and the traditional formula used by the Department of Housing and Urban Development (HUD) may be partly responsible. HUD sets Section 8 limits, known as Fair Market Rents (FMRs), based on the 40th percentile rent of each region. As a result, vouchers cannot be used in the more expensive parts of metropolitan areas where most of the rental units available are more expensive than that regional limit. HUD is now experimenting with recalculating the FMRs at the ZIP code level in select cities to correct this imbalance. These new geographic areas would be known as “Small Area Fair Market Rents” (SAFMRs).
This brief summarizes findings from the project, which evaluated this HUD policy by calculating if a set of for-rent listings across California are accessible to a voucher holder under the current FMRs limits and again under the proposed SAFMRs limits. The rental listings, from a proprietary source, include data from 2012 and 2013. This brief focuses on results for the Sacramento Metropolitan Statistical Area, which includes Sacramento, Placer, and El Dorado Counties.